The Larkspur Furniture Company needs a new grinder. Compute the present worth for thesemutually exclusive alternatives and identify which you would recommend given i-10% per year.Larkspur uses a 10-year planning horizon.Alternati veABInitial Cost$4500$5500Annual Costs$300$400$05 years 10 yearsSalvage Value$500Lifea) PW costs of alternative Ab) PW costs of alternative Bc) Which one do you recommend? Explain why.

Net present worth is defined as the present value of the total cash flows over a period. In other…

Answered: The Larkspur Furniture Company needs a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

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Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Emerson Electric manufactures compressors for air conditioners. It needs replacement equipment to improve one of its manufacturing lines. Select between two options using the MARR of 14% per year and a future worth analysis for the expected use period. What are the future values of each option? Option First cost, S A B -64,000-76,000 -16,000-22,000 AOC, $ per year Expected salvage value 8,000 11,000 Expected use, years 3 6
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The following two alternatives are given. Data A B. First Cost $8,200 $5,600 Annual Cost $1,000 $800 Annual Benefit $2,700 $2,100 Life, Years 7. Salvage Value $2,800 $1,000 Assume that MARR is 15%. Use the incremental rate of return analysis to determine which alternative (A or B) one should choose. Find the AIRR, or a range of AIRR. O 10% O 10-12% O 12-15% O > 15%
A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10% a. Using Benefit- Cost analysis, what is the Benefit/Cost ratio for this equipment purchase? b. Based on the Benefit/Cost analysis should Metro Atlanta purchase the equipment?
Two copier machines can be used for fast printing. Which machine should be selected on the basis of a present worth analysis using the LCM, at an interest rate of 10% per year? Answer the below questions to select the best Option. Machine A 1.116,334 Machine B 598,852 First cost,$ Annual operating cost, S per year 65,061 32,000 Savage value, S Update cost at year 2, $ ife, years 80,000 130,000 15,000 8. PW for Process A=
A firm is considering two alternatives that have no salvage value. At the end of 4 years, another B may be purchased with the same cost, benefits and so forth. a. Construct a choice table for interest rates from 0% to 100%. b. If the MARR is 10%, which alternative should be selected? Item Initial Cost Uniform Annual Benefits Useful Life, in years A -$10,700 2,100 8 B -$5,500 1,800 4
A company will buy a packaging machine. Information about the machines is given below. Which of the machines should be invested according to the net present value method? Purchase price TL Annual income, TL Manufacturing cost,annual TL Manufacturing cost every 5 years TL Scrap value TL Economic life Interest rate A 5000 1800 TL for the first year and 100 TL every year increasing 400 500 3000 18 yıl %25 B 4500 1700 TL for the first year and 80 TL every year increasing 350 650 2500 18 yıl %25
In planning the establishment of MOCAF flour mill facilities there are several alternatives as follows: (x Rp million,-) Alternative I Alternative Il Alternative III Initial investment 4.000 6 200 Annual net receipts 800 1260 Final score 0 400 Economic age 10 years. 10 years If the MARR is 12% per year, look for the best alternative with the method: a. Net Present Value b. IRR 7 600 1 500 600 10 years
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A Mountain Frost is considering a new project with an initial cost of $270,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $21,300, $22,200, $24,600, and $18.200, respectively, What is the average accounting return? Multiple Choice O O O C 14.65% 15.00% 11.99% 1712%
You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 14% per year? Why is yours the correct choice? X $-40,000 $-12000 $1,500 5 years The present worth of alternative X is $ Alternative (Click to select) is selected by the company. Alternative First Cost Maintenance cost, per Year Salvage Value Life Y $-60,000 $-2000 $2,500 5 years and that of alternative Y is $

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